• Service: Tax, Global Transfer Pricing Services
  • Type: Business and industry issue, Survey report
  • Date: 7/18/2013

Tax authority views: Denmark 

Denmark Flag
How are tax authorities conducting APAs? What are they concerned with? These exclusive interviews can help taxpayers simplify the process.

We have gathered feedback from the tax authorities of various key countries to find out the specifics about their APA programs. Read the following Q&A interview on the topic of APAs in Denmark with Troels Kjølby Nielsen, Head of Division and Competent Authority of Denmark’s tax authority.


Our successes are mainly on the large markets: China, the US and Japan. Denmark was the first European country to conclude an APA with China. And it is many years since we concluded the first APA with Japan and the US.

We have developed a lot of knowledge and experience and would like to test the possibility to conclude APAs with countries other than those we already have a good working relationship with.

Issues and challenges

The Danish programme is generally bilateral - there are not many unilateral cases. We try to create as small a threshold as possible - all are welcome, big and small. However, I would generally only recommend an APA when the transactions are large, complex or outside the EU.

An APA is no guarantee that there will not be a tax audit. However, so far it has not been necessary to undertake any additional audit once the APA is in force.

In practice, there is not necessarily any great difference between a MAP and an APA. There is often roll-back on the APA.

Substantive issues: Location savings, market characteristics and marketing intangibles.

Best practices

Middle of the road-filing, meaning that the filing must be reasonable. One should not try to be over aggressive, make a reasonable and thorough presentation/request - a reasonable and fair balance.

The adviser/company should invest resources in providing the answers which must be provided and allocate the resources. Management resources must be allocated and there must be clear and well-defined ownership of the case.

It will not help the case if there are surprises in the course of the process. The company should discuss its plans up-front with the tax authorities and explain its choices.

If the companies try to all intents and purposes to go after a median instead of a quartile (middle of the road), they will not have any problems as far as I can see.

Trends and outlook

It is difficult to foresee the future. In the long run it is possible that there will be a Dispute Settlement Body (like in the WTO) within the EU or OECD for TP, there will be more and more arbitration clauses in more countries' Double Tax Treaties.

Transfer pricing methodology:

TNMM is almost always used. TNMM is often used with a composite range where a median is calculated on a transaction, another median on another transaction, etc. which results in the target which the company must try to aim for.

Non-adjustment range:

We often use this. It doesn't matter whether one uses interquartile or non-adjustment, but non-adjustment often gives more comfort on both sides of the table.

Reasons for APA:

Different types of certainty.


Many cases within pharma. Many recurrent companies (several cases on the same company).

ACAP (Accelerated Competent Authority Procedure).

We are flexible, e.g. a MAP for some years, an ACAP for some years and an APA for some years.


Typically an annual APA - implementation report.

We can withdraw an APA if there is no longer compliance with the information given. For example, if there are major business changes without informing the appropriate authorities. If there are major changes, the company should notify us immediately. Usually such a situation is solved amicably, possibly through renegotiation.

Tax governance:

This is basically the whole idea with what we are doing. We recommend that the taxpayer submits all information. We will find it anyway so let's take it up-front.

Year-end adjustments:

As far as I can see, one must make regular adjustments and monitoring during the year.

Contemporaneous documentation:

In Denmark, we say that we must use data originating from the same time period as the transaction took place (hindsight not accepted) regardless of when this was published.


Share this

Share this